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An improved system for speech digitization using adaptive differential pulse-code modulation (ADPCM) is described. The system uses an adaptive predictor, an adaptive quantizer, and a variable length source coding scheme to achieve a 4-5 dB increase in signal-to-noise ratio over previous ADPCM. The increase can be used to improve speech quality at moderate data rates on the order of 16 kbits/s or to retain the same quality and reduce the data rate to 9.6 kbits/s. The latter alternative permits the use of narrow-band channels. The implementation complexity is on the same order as other ADPCM systems.